Is the Graham-Cassidy Health Care Bill Really About Tax Cuts?

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Another important point about the Graham-Cassidy plan: The abrupt elimination of federal health care funding for block grants to the states in 2027 doesn’t have to be in the bill, the Center on Budget and Policy Priorities says in a new report.

Authors David Kamin and Richard Kogin take issue with two claims the bill’s sponsors have made in defending the funding cliff: First, that it’s necessary in order to unlock the procedural method known as reconciliation that Republicans want to use to pass the bill without Democratic votes. Second, that it doesn’t really matter because Congress will reauthorize funding for the block grants before they expire. “The first claim is false, the second highly misleading,” the CBPP authors charge.

On the first point, the authors explain that the block grants could be made permanent because reconciliation requires that legislation not add to the deficit beyond the 10-year budget window. The Graham-Cassidy bill meets that test “since its cuts to health care funding are deeper than its tax cuts, whether or not the block grant continues.”

On the second point, they warn that, even if Congress were to reauthorize funding for the block grants, the uncertainty surrounding the decision is likely to have consequences before 2027. States might pull back on programs to expand coverage, insurers might drop out, and health care providers might hold off on new hires or investments.

At the same time, the authors write that the budget baseline would suddenly be lower once the block grants expire, making it harder to renew the funding. Lawmakers would have to scale back the grants or come up with hundreds of billions of dollars in additional offsetting cost cuts.

And they suggest one other reason the legislation may have been written to have the federal funding end: Lowering the budget baseline and showing smaller deficits for 2027 and beyond could make it easier to push through the tax cuts Republicans are pursuing. “In this way, policymakers could essentially use health cuts to finance tax cuts, even if they are not packaged together in the same bill.”

As editor in chief, Yuval Rosenberg oversees all aspects of The Fiscal Times' website and email newsletter. His writing has appeared in publications including BusinessWeek, CNBC.com, CNNMoney.com, Fast Company, Fortune, Newsweek, Money and Time.